The formula
Every reputable cash buyer uses some version of: Offer = ARV × 0.70 − Repairs
- ARV = After-Repair Value (what the property will sell for once renovated)
- 0.70 = the factor covering buyer margin + holding costs + soft costs
- Repairs = cost to bring the property to ARV condition
Some buyers use 0.65 (more aggressive), some use 0.75 (less aggressive). In LAs relatively efficient market, 0.70 is typical for standard retail-grade renovations.
Three real examples from our LA deals
Example 1: Van Nuys 3/2 post-war ranch
- ARV (comps): $765,000
- Needed work: new kitchen, both baths, flooring throughout, exterior paint, minor foundation: $110,000
- Our offer: ($765K × 0.70) − $110K = $535,500 − $110,000 = $425,500
Example 2: Highland Park 2/1 craftsman
- ARV: $1,100,000 (fully renovated historically-sensitive craftsman)
- Needed work: full systems (electrical, plumbing, HVAC), kitchen/bath, foundation, roof, exterior restoration: $260,000
- Our offer: ($1,100K × 0.70) − $260K = $770,000 − $260,000 = $510,000
Example 3: Long Beach 4-plex (tenant-occupied)
- ARV: $1,350,000 (at stabilized market rents after renovation)
- Needed work: full interior renovation of all 4 units, exterior, systems: $180,000
- Tenant-occupied — no relocation needed (existing tenants stay through transition)
- Our offer: ($1,350K × 0.70) − $180K = $945,000 − $180,000 = $765,000
Why the 0.70 factor?
It covers, in rough order:
- Closing costs on our purchase: ~1.5%
- Holding costs (property tax, insurance, utilities, loan interest) for 6-9 months: 3-5%
- Selling costs when we resell (agent commissions, closing costs): 7%
- Our margin: 10-15%
So the full stack is typically 22-27% of ARV. We round to 30% for a clean formula.
Ways to push our offer higher
- Provide accurate condition information. Surprises during inspection reduce the offer by more than the true cost
- Be flexible on close date. Tight deadlines reduce flexibility
- Provide recent comps or inspection reports if available — reduces our uncertainty
- Clean title. Properties with lien complications or probate uncertainty take more risk premium
- Multiple offers. Get competing offers — we adjust when we know
What separates us from bad-actor cash buyers
- We present written offers — never just verbal "we would pay X"
- We show our math. Our offer letter includes the ARV assumption, the repair estimate, and the formula
- We do not use bait-and-switch tactics (offer high, reduce after inspection) — our offer includes a 5-day inspection period and we stand behind the number unless we find something materially different from what you disclosed
- We close on our timeline commitments. Ask for references
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See My Cash Offer →📞 (310) 295-1818Numbers shown are illustrative of typical deals. Your propertys offer depends on specific comps, condition, and market factors at time of evaluation.